USDA updates 3 key crop insurance options for livestock producers
By: Sydney Sheffield
The United States Department of Agriculture (USDA) has updated three key crop insurance options for livestock producers: the Dairy Revenue Protection (DRP), Livestock Gross Margin (LGM), and Livestock Risk Protection (LRP). The updates were published last week for the 2023 crop year, which begins July 1, 2022. USDA’s Risk Management Agency (RMA) revised the insurance options to reach more producers, and offer greater flexibility for protecting their operations, to better meet the needs of America’s swine, dairy, and cattle producers.
DRP is designed to insure against unexpected declines in the quarterly revenue from milk sales relative to a guaranteed coverage level. The update will allow dairy producers to continue coverage even if they experience a disaster, such as a barn fire, at their operation.
LGM protects against the loss of gross margin, or livestock’s market value minus feed costs. The LGM update expanded Cattle, Dairy, and Swine coverage, so it is now available in all counties in all 50 states.
Lastly, the LRP provides protection against price declines. The LRP update requires insurance companies to pay indemnities within 30 days, rather than the previous 60 days, following the receipt of the claim form. Additionally, head limits have been increased:
Fed Cattle: 12,000 head per endorsement and 25,000 head per crop year
Feeder Cattle: 12,000 head per endorsement and 25,000 head per crop year
Swine: 70,000 head per endorsement and 750,000 head per crop year
The termination date under LRP has been extended from June 30th to August 31st. Finally, location reporting requirements have been relaxed to list only state and county, instead of the precise legal location.
“Great and sound customer service is the most important thing we can provide our nation’s producers, making sure the programs and products we offer give them the most useful tools for covering their risks,” RMA Administrator Marcia Bunger said in the USDA press release. “Agriculture is not a static industry, and these updates reflect the importance we place on always knowing the evolving needs of producers and offering the most people the best risk management tools we can.”
These USDA updates will allow producers to have more flexibility for DRP, LGM, and LRP when indemnities are used to pay premiums, which can help producers manage their operation’s cash flow. With these updates, producers can now have both LGM and LRP policies. Some restrictions do apply, such as producers cannot insure the same class of livestock for the same time or have the same livestock insured under multiple policies.
For more information, check out the RMA’s Livestock Insurance Plans webpage.